99TH GENERAL ASSEMBLY
State of Illinois
2015 and 2016
SB1480
 
Introduced 2/20/2015, by Sen. Dale A. Righter
 
SYNOPSIS AS INTRODUCED:



20 ILCS 3855/1-75

 Amends the Illinois Power Agency Act. Provides that the Illinois Power Agency and Illinois Commerce Commission shall include sourcing agreements covering power produced by clean coal and other facilities. Provides that utilities and alternative retail electric supplies shall into sourcing agreements as part of the annual power procurement process. Provides that the Agency and Commission shall establish competitive bidding procedures for sourcing terms. Sets the requirements of the sourcing agreements. Makes technical changes. Effective immediately.



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A BILL FOR
 


SB1480LRB099 07369 MLM 27483 b



1 AN ACT concerning State government.


2 Be it enacted by the People of the State of Illinois,

3represented in the General Assembly:



4 Section 5. The Illinois Power Agency Act is amended by 
5changing Section 1-75 as follows:

6 (20 ILCS 3855/1-75)
7 Sec. 1-75. Planning and Procurement Bureau. The Planning 
8and Procurement Bureau has the following duties and 
9responsibilities:
10 (a) The Planning and Procurement Bureau shall each year, 
11beginning in 2008, develop procurement plans and conduct 
12competitive procurement processes in accordance with the 
13requirements of Section 16-111.5 of the Public Utilities Act 
14for the eligible retail customers of electric utilities that on 
15December 31, 2005 provided electric service to at least 100,000 
16customers in Illinois. The Planning and Procurement Bureau 
17shall also develop procurement plans and conduct competitive 
18procurement processes in accordance with the requirements of 
19Section 16-111.5 of the Public Utilities Act for the eligible 
20retail customers of small multi-jurisdictional electric 
21utilities that (i) on December 31, 2005 served less than 
22100,000 customers in Illinois and (ii) request a procurement 
23plan for their Illinois jurisdictional load. This Section shall 
 
 
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1not apply to a small multi-jurisdictional utility until such 
2time as a small multi-jurisdictional utility requests the 
3Agency to prepare a procurement plan for their Illinois 
4jurisdictional load. For the purposes of this Section, the term 
5"eligible retail customers" has the same definition as found in 
6Section 16-111.5(a) of the Public Utilities Act.
7  (1) The Agency shall each year, beginning in 2008, as 
8 needed, issue a request for qualifications for experts or 
9 expert consulting firms to develop the procurement plans in 
10 accordance with Section 16-111.5 of the Public Utilities 
11 Act. In order to qualify an expert or expert consulting 
12 firm must have:
13   (A) direct previous experience assembling 
14 large-scale power supply plans or portfolios for 
15 end-use customers;
16   (B) an advanced degree in economics, mathematics, 
17 engineering, risk management, or a related area of 
18 study;
19   (C) 10 years of experience in the electricity 
20 sector, including managing supply risk;
21   (D) expertise in wholesale electricity market 
22 rules, including those established by the Federal 
23 Energy Regulatory Commission and regional transmission 
24 organizations;
25   (E) expertise in credit protocols and familiarity 
26 with contract protocols;
 
 
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1   (F) adequate resources to perform and fulfill the 
2 required functions and responsibilities; and
3   (G) the absence of a conflict of interest and 
4 inappropriate bias for or against potential bidders or 
5 the affected electric utilities.
6  (2) The Agency shall each year, as needed, issue a 
7 request for qualifications for a procurement administrator 
8 to conduct the competitive procurement processes in 
9 accordance with Section 16-111.5 of the Public Utilities 
10 Act. In order to qualify an expert or expert consulting 
11 firm must have:
12   (A) direct previous experience administering a 
13 large-scale competitive procurement process;
14   (B) an advanced degree in economics, mathematics, 
15 engineering, or a related area of study;
16   (C) 10 years of experience in the electricity 
17 sector, including risk management experience;
18   (D) expertise in wholesale electricity market 
19 rules, including those established by the Federal 
20 Energy Regulatory Commission and regional transmission 
21 organizations; 
22   (E) expertise in credit and contract protocols;
23   (F) adequate resources to perform and fulfill the 
24 required functions and responsibilities; and
25   (G) the absence of a conflict of interest and 
26 inappropriate bias for or against potential bidders or 
 
 
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1 the affected electric utilities.
2  (3) The Agency shall provide affected utilities and 
3 other interested parties with the lists of qualified 
4 experts or expert consulting firms identified through the 
5 request for qualifications processes that are under 
6 consideration to develop the procurement plans and to serve 
7 as the procurement administrator. The Agency shall also 
8 provide each qualified expert's or expert consulting 
9 firm's response to the request for qualifications. All 
10 information provided under this subparagraph shall also be 
11 provided to the Commission. The Agency may provide by rule 
12 for fees associated with supplying the information to 
13 utilities and other interested parties. These parties 
14 shall, within 5 business days, notify the Agency in writing 
15 if they object to any experts or expert consulting firms on 
16 the lists. Objections shall be based on:
17   (A) failure to satisfy qualification criteria;
18   (B) identification of a conflict of interest; or
19   (C) evidence of inappropriate bias for or against 
20 potential bidders or the affected utilities.
21  The Agency shall remove experts or expert consulting 
22 firms from the lists within 10 days if there is a 
23 reasonable basis for an objection and provide the updated 
24 lists to the affected utilities and other interested 
25 parties. If the Agency fails to remove an expert or expert 
26 consulting firm from a list, an objecting party may seek 
 
 
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1 review by the Commission within 5 days thereafter by filing 
2 a petition, and the Commission shall render a ruling on the 
3 petition within 10 days. There is no right of appeal of the 
4 Commission's ruling.
5  (4) The Agency shall issue requests for proposals to 
6 the qualified experts or expert consulting firms to develop 
7 a procurement plan for the affected utilities and to serve 
8 as procurement administrator.
9  (5) The Agency shall select an expert or expert 
10 consulting firm to develop procurement plans based on the 
11 proposals submitted and shall award contracts of up to 5 
12 years to those selected.
13  (6) The Agency shall select an expert or expert 
14 consulting firm, with approval of the Commission, to serve 
15 as procurement administrator based on the proposals 
16 submitted. If the Commission rejects, within 5 days, the 
17 Agency's selection, the Agency shall submit another 
18 recommendation within 3 days based on the proposals 
19 submitted. The Agency shall award a 5-year contract to the 
20 expert or expert consulting firm so selected with 
21 Commission approval.
22 (b) The experts or expert consulting firms retained by the 
23Agency shall, as appropriate, prepare procurement plans, and 
24conduct a competitive procurement process as prescribed in 
25Section 16-111.5 of the Public Utilities Act, to ensure 
26adequate, reliable, affordable, efficient, and environmentally 
 
 
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1sustainable electric service at the lowest total cost over 
2time, taking into account any benefits of price stability, for 
3eligible retail customers of electric utilities that on 
4December 31, 2005 provided electric service to at least 100,000 
5customers in the State of Illinois, and for eligible Illinois 
6retail customers of small multi-jurisdictional electric 
7utilities that (i) on December 31, 2005 served less than 
8100,000 customers in Illinois and (ii) request a procurement 
9plan for their Illinois jurisdictional load.
10 (c) Renewable portfolio standard.
11  (1) The procurement plans shall include cost-effective 
12 renewable energy resources. A minimum percentage of each 
13 utility's total supply to serve the load of eligible retail 
14 customers, as defined in Section 16-111.5(a) of the Public 
15 Utilities Act, procured for each of the following years 
16 shall be generated from cost-effective renewable energy 
17 resources: at least 2% by June 1, 2008; at least 4% by June 
18 1, 2009; at least 5% by June 1, 2010; at least 6% by June 1, 
19 2011; at least 7% by June 1, 2012; at least 8% by June 1, 
20 2013; at least 9% by June 1, 2014; at least 10% by June 1, 
21 2015; and increasing by at least 1.5% each year thereafter 
22 to at least 25% by June 1, 2025. To the extent that it is 
23 available, at least 75% of the renewable energy resources 
24 used to meet these standards shall come from wind 
25 generation and, beginning on June 1, 2011, at least the 
26 following percentages of the renewable energy resources 
 
 
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1 used to meet these standards shall come from photovoltaics 
2 on the following schedule: 0.5% by June 1, 2012, 1.5% by 
3 June 1, 2013; 3% by June 1, 2014; and 6% by June 1, 2015 and 
4 thereafter. Of the renewable energy resources procured 
5 pursuant to this Section, at least the following 
6 percentages shall come from distributed renewable energy 
7 generation devices: 0.5% by June 1, 2013, 0.75% by June 1, 
8 2014, and 1% by June 1, 2015 and thereafter. To the extent 
9 available, half of the renewable energy resources procured 
10 from distributed renewable energy generation shall come 
11 from devices of less than 25 kilowatts in nameplate 
12 capacity. Renewable energy resources procured from 
13 distributed generation devices may also count towards the 
14 required percentages for wind and solar photovoltaics. 
15 Procurement of renewable energy resources from distributed 
16 renewable energy generation devices shall be done on an 
17 annual basis through multi-year contracts of no less than 5 
18 years, and shall consist solely of renewable energy 
19 credits.
20  The Agency shall create credit requirements for 
21 suppliers of distributed renewable energy. In order to 
22 minimize the administrative burden on contracting 
23 entities, the Agency shall solicit the use of third-party 
24 organizations to aggregate distributed renewable energy 
25 into groups of no less than one megawatt in installed 
26 capacity. These third-party organizations shall administer 
 
 
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1 contracts with individual distributed renewable energy 
2 generation device owners. An individual distributed 
3 renewable energy generation device owner shall have the 
4 ability to measure the output of his or her distributed 
5 renewable energy generation device.
6  For purposes of this subsection (c), "cost-effective" 
7 means that the costs of procuring renewable energy 
8 resources do not cause the limit stated in paragraph (2) of 
9 this subsection (c) to be exceeded and do not exceed 
10 benchmarks based on market prices for renewable energy 
11 resources in the region, which shall be developed by the 
12 procurement administrator, in consultation with the 
13 Commission staff, Agency staff, and the procurement 
14 monitor and shall be subject to Commission review and 
15 approval. 
16  (2) For purposes of this subsection (c), the required 
17 procurement of cost-effective renewable energy resources 
18 for a particular year shall be measured as a percentage of 
19 the actual amount of electricity (megawatt-hours) supplied 
20 by the electric utility to eligible retail customers in the 
21 planning year ending immediately prior to the procurement. 
22 For purposes of this subsection (c), the amount paid per 
23 kilowatthour means the total amount paid for electric 
24 service expressed on a per kilowatthour basis. For purposes 
25 of this subsection (c), the total amount paid for electric 
26 service includes without limitation amounts paid for 
 
 
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1 supply, transmission, distribution, surcharges, and add-on 
2 taxes.
3  Notwithstanding the requirements of this subsection 
4 (c), the total of renewable energy resources procured 
5 pursuant to the procurement plan for any single year shall 
6 be reduced by an amount necessary to limit the annual 
7 estimated average net increase due to the costs of these 
8 resources included in the amounts paid by eligible retail 
9 customers in connection with electric service to:
10   (A) in 2008, no more than 0.5% of the amount paid 
11 per kilowatthour by those customers during the year 
12 ending May 31, 2007;
13   (B) in 2009, the greater of an additional 0.5% of 
14 the amount paid per kilowatthour by those customers 
15 during the year ending May 31, 2008 or 1% of the amount 
16 paid per kilowatthour by those customers during the 
17 year ending May 31, 2007;
18   (C) in 2010, the greater of an additional 0.5% of 
19 the amount paid per kilowatthour by those customers 
20 during the year ending May 31, 2009 or 1.5% of the 
21 amount paid per kilowatthour by those customers during 
22 the year ending May 31, 2007;
23   (D) in 2011, the greater of an additional 0.5% of 
24 the amount paid per kilowatthour by those customers 
25 during the year ending May 31, 2010 or 2% of the amount 
26 paid per kilowatthour by those customers during the 
 
 
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1 year ending May 31, 2007; and 
2   (E) thereafter, the amount of renewable energy 
3 resources procured pursuant to the procurement plan 
4 for any single year shall be reduced by an amount 
5 necessary to limit the estimated average net increase 
6 due to the cost of these resources included in the 
7 amounts paid by eligible retail customers in 
8 connection with electric service to no more than the 
9 greater of 2.015% of the amount paid per kilowatthour 
10 by those customers during the year ending May 31, 2007 
11 or the incremental amount per kilowatthour paid for 
12 these resources in 2011.
13   No later than June 30, 2011, the Commission shall 
14 review the limitation on the amount of renewable energy 
15 resources procured pursuant to this subsection (c) and 
16 report to the General Assembly its findings as to 
17 whether that limitation unduly constrains the 
18 procurement of cost-effective renewable energy 
19 resources.
20  (3) Through June 1, 2011, renewable energy resources 
21 shall be counted for the purpose of meeting the renewable 
22 energy standards set forth in paragraph (1) of this 
23 subsection (c) only if they are generated from facilities 
24 located in the State, provided that cost-effective 
25 renewable energy resources are available from those 
26 facilities. If those cost-effective resources are not 
 
 
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1 available in Illinois, they shall be procured in states 
2 that adjoin Illinois and may be counted towards compliance. 
3 If those cost-effective resources are not available in 
4 Illinois or in states that adjoin Illinois, they shall be 
5 purchased elsewhere and shall be counted towards 
6 compliance. After June 1, 2011, cost-effective renewable 
7 energy resources located in Illinois and in states that 
8 adjoin Illinois may be counted towards compliance with the 
9 standards set forth in paragraph (1) of this subsection 
10 (c). If those cost-effective resources are not available in 
11 Illinois or in states that adjoin Illinois, they shall be 
12 purchased elsewhere and shall be counted towards 
13 compliance. 
14  (4) The electric utility shall retire all renewable 
15 energy credits used to comply with the standard.
16  (5) Beginning with the year commencing June 1, 2010, an 
17 electric utility subject to this subsection (c) shall apply 
18 the lesser of the maximum alternative compliance payment 
19 rate or the most recent estimated alternative compliance 
20 payment rate for its service territory for the 
21 corresponding compliance period, established pursuant to 
22 subsection (d) of Section 16-115D of the Public Utilities 
23 Act to its retail customers that take service pursuant to 
24 the electric utility's hourly pricing tariff or tariffs. 
25 The electric utility shall retain all amounts collected as 
26 a result of the application of the alternative compliance 
 
 
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1 payment rate or rates to such customers, and, beginning in 
2 2011, the utility shall include in the information provided 
3 under item (1) of subsection (d) of Section 16-111.5 of the 
4 Public Utilities Act the amounts collected under the 
5 alternative compliance payment rate or rates for the prior 
6 year ending May 31. Notwithstanding any limitation on the 
7 procurement of renewable energy resources imposed by item 
8 (2) of this subsection (c), the Agency shall increase its 
9 spending on the purchase of renewable energy resources to 
10 be procured by the electric utility for the next plan year 
11 by an amount equal to the amounts collected by the utility 
12 under the alternative compliance payment rate or rates in 
13 the prior year ending May 31. Beginning April 1, 2012, and 
14 each year thereafter, the Agency shall prepare a public 
15 report for the General Assembly and Illinois Commerce 
16 Commission that shall include, but not necessarily be 
17 limited to:
18   (A) a comparison of the costs associated with the 
19 Agency's procurement of renewable energy resources to 
20 (1) the Agency's costs associated with electricity 
21 generated by other types of generation facilities and 
22 (2) the benefits associated with the Agency's 
23 procurement of renewable energy resources; and
24   (B) an analysis of the rate impacts associated with 
25 the Illinois Power Agency's procurement of renewable 
26 resources, including, but not limited to, any 
 
 
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1 long-term contracts, on the eligible retail customers 
2 of electric utilities.
3  The analysis shall include the Agency's estimate of the 
4 total dollar impact that the Agency's procurement of 
5 renewable resources has had on the annual electricity bills 
6 of the customer classes that comprise each eligible retail 
7 customer class taking service from an electric utility. The 
8 Agency's report shall also analyze how the operation of the 
9 alternative compliance payment mechanism, any long-term 
10 contracts, or other aspects of the applicable renewable 
11 portfolio standards impacts the rates of customers of 
12 alternative retail electric suppliers. 
13 (d) Clean coal portfolio standard.
14  (1) The procurement plans shall include electricity 
15 generated using clean coal. Each utility shall enter into 
16 one or more sourcing agreements with the initial clean coal 
17 facility, as provided in paragraph (3) of this subsection 
18 (d), covering electricity generated by the initial clean 
19 coal facility representing at least 5% of each utility's 
20 total supply to serve the load of eligible retail customers 
21 in 2015 and each year thereafter, as described in paragraph 
22 (3) of this subsection (d), subject to the limits specified 
23 in paragraph (2) of this subsection (d). It is the goal of 
24 the State that by January 1, 2025, 25% of the electricity 
25 used in the State shall be generated by cost-effective 
26 clean coal facilities. For purposes of this subsection (d), 
 
 
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1 "cost-effective" means that the expenditures pursuant to 
2 such sourcing agreements do not cause the limit stated in 
3 paragraph (2) of this subsection (d) to be exceeded and do 
4 not exceed cost-based benchmarks, which shall be developed 
5 to assess all expenditures pursuant to such sourcing 
6 agreements covering electricity generated by clean coal 
7 facilities, other than the initial clean coal facility, by 
8 the procurement administrator, in consultation with the 
9 Commission staff, Agency staff, and the procurement 
10 monitor and shall be subject to Commission review and 
11 approval.
12  A utility party to a sourcing agreement shall 
13 immediately retire any emission credits that it receives in 
14 connection with the electricity covered by such agreement.
15  Utilities shall maintain adequate records documenting 
16 the purchases under the sourcing agreement to comply with 
17 this subsection (d) and shall file an accounting with the 
18 load forecast that must be filed with the Agency by July 15 
19 of each year, in accordance with subsection (d) of Section 
20 16-111.5 of the Public Utilities Act.
21  A utility shall be deemed to have complied with the 
22 clean coal portfolio standard specified in this subsection 
23 (d) if the utility enters into a sourcing agreement as 
24 required by this subsection (d). 
25  (2) For purposes of this subsection (d), the required 
26 execution of sourcing agreements with the initial clean 
 
 
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1 coal facility for a particular year shall be measured as a 
2 percentage of the actual amount of electricity 
3 (megawatt-hours) supplied by the electric utility to 
4 eligible retail customers in the planning year ending 
5 immediately prior to the agreement's execution. For 
6 purposes of this subsection (d), the amount paid per 
7 kilowatthour means the total amount paid for electric 
8 service expressed on a per kilowatthour basis. For purposes 
9 of this subsection (d), the total amount paid for electric 
10 service includes without limitation amounts paid for 
11 supply, transmission, distribution, surcharges and add-on 
12 taxes.
13  Notwithstanding the requirements of this subsection 
14 (d), the total amount paid under sourcing agreements with 
15 clean coal facilities pursuant to the procurement plan for 
16 any given year shall be reduced by an amount necessary to 
17 limit the annual estimated average net increase due to the 
18 costs of these resources included in the amounts paid by 
19 eligible retail customers in connection with electric 
20 service to:
21   (A) in 2010, no more than 0.5% of the amount paid 
22 per kilowatthour by those customers during the year 
23 ending May 31, 2009;
24   (B) in 2011, the greater of an additional 0.5% of 
25 the amount paid per kilowatthour by those customers 
26 during the year ending May 31, 2010 or 1% of the amount 
 
 
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1 paid per kilowatthour by those customers during the 
2 year ending May 31, 2009;
3   (C) in 2012, the greater of an additional 0.5% of 
4 the amount paid per kilowatthour by those customers 
5 during the year ending May 31, 2011 or 1.5% of the 
6 amount paid per kilowatthour by those customers during 
7 the year ending May 31, 2009;
8   (D) in 2013, the greater of an additional 0.5% of 
9 the amount paid per kilowatthour by those customers 
10 during the year ending May 31, 2012 or 2% of the amount 
11 paid per kilowatthour by those customers during the 
12 year ending May 31, 2009; and
13   (E) thereafter, the total amount paid under 
14 sourcing agreements with clean coal facilities 
15 pursuant to the procurement plan for any single year 
16 shall be reduced by an amount necessary to limit the 
17 estimated average net increase due to the cost of these 
18 resources included in the amounts paid by eligible 
19 retail customers in connection with electric service 
20 to no more than the greater of (i) 2.015% of the amount 
21 paid per kilowatthour by those customers during the 
22 year ending May 31, 2009 or (ii) the incremental amount 
23 per kilowatthour paid for these resources in 2013. 
24 These requirements may be altered only as provided by 
25 statute.
26  No later than June 30, 2015, the Commission shall 
 
 
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1 review the limitation on the total amount paid under 
2 sourcing agreements, if any, with clean coal facilities 
3 pursuant to this subsection (d) and report to the General 
4 Assembly its findings as to whether that limitation unduly 
5 constrains the amount of electricity generated by 
6 cost-effective clean coal facilities that is covered by 
7 sourcing agreements.
8  (3) Initial clean coal facility. In order to promote 
9 development of clean coal facilities in Illinois, each 
10 electric utility subject to this Section shall execute a 
11 sourcing agreement to source electricity from a proposed 
12 clean coal facility in Illinois (the "initial clean coal 
13 facility") that will have a nameplate capacity of at least 
14 500 MW when commercial operation commences, that has a 
15 final Clean Air Act permit on the effective date of this 
16 amendatory Act of the 95th General Assembly, and that will 
17 meet the definition of clean coal facility in Section 1-10 
18 of this Act when commercial operation commences. The 
19 sourcing agreements with this initial clean coal facility 
20 shall be subject to both approval of the initial clean coal 
21 facility by the General Assembly and satisfaction of the 
22 requirements of paragraph (4) of this subsection (d) and 
23 shall be executed within 90 days after any such approval by 
24 the General Assembly. The Agency and the Commission shall 
25 have authority to inspect all books and records associated 
26 with the initial clean coal facility during the term of 
 
 
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1 such a sourcing agreement. A utility's sourcing agreement 
2 for electricity produced by the initial clean coal facility 
3 shall include:
4   (A) a formula contractual price (the "contract 
5 price") approved pursuant to paragraph (4) of this 
6 subsection (d), which shall:
7    (i) be determined using a cost of service 
8 methodology employing either a level or deferred 
9 capital recovery component, based on a capital 
10 structure consisting of 45% equity and 55% debt, 
11 and a return on equity as may be approved by the 
12 Federal Energy Regulatory Commission, which in any 
13 case may not exceed the lower of 11.5% or the rate 
14 of return approved by the General Assembly 
15 pursuant to paragraph (4) of this subsection (d); 
16 and
17    (ii) provide that all miscellaneous net 
18 revenue, including but not limited to net revenue 
19 from the sale of emission allowances, if any, 
20 substitute natural gas, if any, grants or other 
21 support provided by the State of Illinois or the 
22 United States Government, firm transmission 
23 rights, if any, by-products produced by the 
24 facility, energy or capacity derived from the 
25 facility and not covered by a sourcing agreement 
26 pursuant to paragraph (3) of this subsection (d) or 
 
 
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1 item (5) of subsection (d) of Section 16-115 of the 
2 Public Utilities Act, whether generated from the 
3 synthesis gas derived from coal, from SNG, or from 
4 natural gas, shall be credited against the revenue 
5 requirement for this initial clean coal facility;
6   (B) power purchase provisions, which shall: 
7    (i) provide that the utility party to such 
8 sourcing agreement shall pay the contract price 
9 for electricity delivered under such sourcing 
10 agreement; 
11    (ii) require delivery of electricity to the 
12 regional transmission organization market of the 
13 utility that is party to such sourcing agreement;
14    (iii) require the utility party to such 
15 sourcing agreement to buy from the initial clean 
16 coal facility in each hour an amount of energy 
17 equal to all clean coal energy made available from 
18 the initial clean coal facility during such hour 
19 times a fraction, the numerator of which is such 
20 utility's retail market sales of electricity 
21 (expressed in kilowatthours sold) in the State 
22 during the prior calendar month and the 
23 denominator of which is the total retail market 
24 sales of electricity (expressed in kilowatthours 
25 sold) in the State by utilities during such prior 
26 month and the sales of electricity (expressed in 
 
 
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1 kilowatthours sold) in the State by alternative 
2 retail electric suppliers during such prior month 
3 that are subject to the requirements of this 
4 subsection (d) and paragraph (5) of subsection (d) 
5 of Section 16-115 of the Public Utilities Act, 
6 provided that the amount purchased by the utility 
7 in any year will be limited by paragraph (2) of 
8 this subsection (d); and
9    (iv) be considered pre-existing contracts in 
10 such utility's procurement plans for eligible 
11 retail customers;
12   (C) contract for differences provisions, which 
13 shall:
14    (i) require the utility party to such sourcing 
15 agreement to contract with the initial clean coal 
16 facility in each hour with respect to an amount of 
17 energy equal to all clean coal energy made 
18 available from the initial clean coal facility 
19 during such hour times a fraction, the numerator of 
20 which is such utility's retail market sales of 
21 electricity (expressed in kilowatthours sold) in 
22 the utility's service territory in the State 
23 during the prior calendar month and the 
24 denominator of which is the total retail market 
25 sales of electricity (expressed in kilowatthours 
26 sold) in the State by utilities during such prior 
 
 
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1 month and the sales of electricity (expressed in 
2 kilowatthours sold) in the State by alternative 
3 retail electric suppliers during such prior month 
4 that are subject to the requirements of this 
5 subsection (d) and paragraph (5) of subsection (d) 
6 of Section 16-115 of the Public Utilities Act, 
7 provided that the amount paid by the utility in any 
8 year will be limited by paragraph (2) of this 
9 subsection (d);
10    (ii) provide that the utility's payment 
11 obligation in respect of the quantity of 
12 electricity determined pursuant to the preceding 
13 clause (i) shall be limited to an amount equal to 
14 (1) the difference between the contract price 
15 determined pursuant to subparagraph (A) of 
16 paragraph (3) of this subsection (d) and the 
17 day-ahead price for electricity delivered to the 
18 regional transmission organization market of the 
19 utility that is party to such sourcing agreement 
20 (or any successor delivery point at which such 
21 utility's supply obligations are financially 
22 settled on an hourly basis) (the "reference 
23 price") on the day preceding the day on which the 
24 electricity is delivered to the initial clean coal 
25 facility busbar, multiplied by (2) the quantity of 
26 electricity determined pursuant to the preceding 
 
 
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1 clause (i); and
2    (iii) not require the utility to take physical 
3 delivery of the electricity produced by the 
4 facility;
5   (D) general provisions, which shall:
6    (i) specify a term of no more than 30 years, 
7 commencing on the commercial operation date of the 
8 facility;
9    (ii) provide that utilities shall maintain 
10 adequate records documenting purchases under the 
11 sourcing agreements entered into to comply with 
12 this subsection (d) and shall file an accounting 
13 with the load forecast that must be filed with the 
14 Agency by July 15 of each year, in accordance with 
15 subsection (d) of Section 16-111.5 of the Public 
16 Utilities Act; 
17    (iii) provide that all costs associated with 
18 the initial clean coal facility will be 
19 periodically reported to the Federal Energy 
20 Regulatory Commission and to purchasers in 
21 accordance with applicable laws governing 
22 cost-based wholesale power contracts;
23    (iv) permit the Illinois Power Agency to 
24 assume ownership of the initial clean coal 
25 facility, without monetary consideration and 
26 otherwise on reasonable terms acceptable to the 
 
 
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1 Agency, if the Agency so requests no less than 3 
2 years prior to the end of the stated contract term;
3    (v) require the owner of the initial clean coal 
4 facility to provide documentation to the 
5 Commission each year, starting in the facility's 
6 first year of commercial operation, accurately 
7 reporting the quantity of carbon emissions from 
8 the facility that have been captured and 
9 sequestered and report any quantities of carbon 
10 released from the site or sites at which carbon 
11 emissions were sequestered in prior years, based 
12 on continuous monitoring of such sites. If, in any 
13 year after the first year of commercial operation, 
14 the owner of the facility fails to demonstrate that 
15 the initial clean coal facility captured and 
16 sequestered at least 50% of the total carbon 
17 emissions that the facility would otherwise emit 
18 or that sequestration of emissions from prior 
19 years has failed, resulting in the release of 
20 carbon dioxide into the atmosphere, the owner of 
21 the facility must offset excess emissions. Any 
22 such carbon offsets must be permanent, additional, 
23 verifiable, real, located within the State of 
24 Illinois, and legally and practicably enforceable. 
25 The cost of such offsets for the facility that are 
26 not recoverable shall not exceed $15 million in any 
 
 
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1 given year. No costs of any such purchases of 
2 carbon offsets may be recovered from a utility or 
3 its customers. All carbon offsets purchased for 
4 this purpose and any carbon emission credits 
5 associated with sequestration of carbon from the 
6 facility must be permanently retired. The initial 
7 clean coal facility shall not forfeit its 
8 designation as a clean coal facility if the 
9 facility fails to fully comply with the applicable 
10 carbon sequestration requirements in any given 
11 year, provided the requisite offsets are 
12 purchased. However, the Attorney General, on 
13 behalf of the People of the State of Illinois, may 
14 specifically enforce the facility's sequestration 
15 requirement and the other terms of this contract 
16 provision. Compliance with the sequestration 
17 requirements and offset purchase requirements 
18 specified in paragraph (3) of this subsection (d) 
19 shall be reviewed annually by an independent 
20 expert retained by the owner of the initial clean 
21 coal facility, with the advance written approval 
22 of the Attorney General. The Commission may, in the 
23 course of the review specified in item (vii), 
24 reduce the allowable return on equity for the 
25 facility if the facility wilfully fails to comply 
26 with the carbon capture and sequestration 
 
 
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1 requirements set forth in this item (v);
2    (vi) include limits on, and accordingly 
3 provide for modification of, the amount the 
4 utility is required to source under the sourcing 
5 agreement consistent with paragraph (2) of this 
6 subsection (d);
7    (vii) require Commission review: (1) to 
8 determine the justness, reasonableness, and 
9 prudence of the inputs to the formula referenced in 
10 subparagraphs (A)(i) through (A)(iii) of paragraph 
11 (3) of this subsection (d), prior to an adjustment 
12 in those inputs including, without limitation, the 
13 capital structure and return on equity, fuel 
14 costs, and other operations and maintenance costs 
15 and (2) to approve the costs to be passed through 
16 to customers under the sourcing agreement by which 
17 the utility satisfies its statutory obligations. 
18 Commission review shall occur no less than every 3 
19 years, regardless of whether any adjustments have 
20 been proposed, and shall be completed within 9 
21 months; 
22    (viii) limit the utility's obligation to such 
23 amount as the utility is allowed to recover through 
24 tariffs filed with the Commission, provided that 
25 neither the clean coal facility nor the utility 
26 waives any right to assert federal pre-emption or 
 
 
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1 any other argument in response to a purported 
2 disallowance of recovery costs;
3    (ix) limit the utility's or alternative retail 
4 electric supplier's obligation to incur any 
5 liability until such time as the facility is in 
6 commercial operation and generating power and 
7 energy and such power and energy is being delivered 
8 to the facility busbar;
9    (x) provide that the owner or owners of the 
10 initial clean coal facility, which is the 
11 counterparty to such sourcing agreement, shall 
12 have the right from time to time to elect whether 
13 the obligations of the utility party thereto shall 
14 be governed by the power purchase provisions or the 
15 contract for differences provisions;
16    (xi) append documentation showing that the 
17 formula rate and contract, insofar as they relate 
18 to the power purchase provisions, have been 
19 approved by the Federal Energy Regulatory 
20 Commission pursuant to Section 205 of the Federal 
21 Power Act;
22    (xii) provide that any changes to the terms of 
23 the contract, insofar as such changes relate to the 
24 power purchase provisions, are subject to review 
25 under the public interest standard applied by the 
26 Federal Energy Regulatory Commission pursuant to 
 
 
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1 Sections 205 and 206 of the Federal Power Act; and
2    (xiii) conform with customary lender 
3 requirements in power purchase agreements used as 
4 the basis for financing non-utility generators. 
5  (4) Effective date of sourcing agreements with the 
6 initial clean coal facility.
7  Any proposed sourcing agreement with the initial clean 
8 coal facility shall not become effective unless the 
9 following reports are prepared and submitted and 
10 authorizations and approvals obtained:
11   (i) Facility cost report. The owner of the initial 
12 clean coal facility shall submit to the Commission, the 
13 Agency, and the General Assembly a front-end 
14 engineering and design study, a facility cost report, 
15 method of financing (including but not limited to 
16 structure and associated costs), and an operating and 
17 maintenance cost quote for the facility (collectively 
18 "facility cost report"), which shall be prepared in 
19 accordance with the requirements of this paragraph (4) 
20 of subsection (d) of this Section, and shall provide 
21 the Commission and the Agency access to the work 
22 papers, relied upon documents, and any other backup 
23 documentation related to the facility cost report.
24   (ii) Commission report. Within 6 months following 
25 receipt of the facility cost report, the Commission, in 
26 consultation with the Agency, shall submit a report to 
 
 
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1 the General Assembly setting forth its analysis of the 
2 facility cost report. Such report shall include, but 
3 not be limited to, a comparison of the costs associated 
4 with electricity generated by the initial clean coal 
5 facility to the costs associated with electricity 
6 generated by other types of generation facilities, an 
7 analysis of the rate impacts on residential and small 
8 business customers over the life of the sourcing 
9 agreements, and an analysis of the likelihood that the 
10 initial clean coal facility will commence commercial 
11 operation by and be delivering power to the facility's 
12 busbar by 2016. To assist in the preparation of its 
13 report, the Commission, in consultation with the 
14 Agency, may hire one or more experts or consultants, 
15 the costs of which shall be paid for by the owner of 
16 the initial clean coal facility. The Commission and 
17 Agency may begin the process of selecting such experts 
18 or consultants prior to receipt of the facility cost 
19 report.
20   (iii) General Assembly approval. The proposed 
21 sourcing agreements shall not take effect unless, 
22 based on the facility cost report and the Commission's 
23 report, the General Assembly enacts authorizing 
24 legislation approving (A) the projected price, stated 
25 in cents per kilowatthour, to be charged for 
26 electricity generated by the initial clean coal 
 
 
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1 facility, (B) the projected impact on residential and 
2 small business customers' bills over the life of the 
3 sourcing agreements, and (C) the maximum allowable 
4 return on equity for the project; and
5   (iv) Commission review. If the General Assembly 
6 enacts authorizing legislation pursuant to 
7 subparagraph (iii) approving a sourcing agreement, the 
8 Commission shall, within 90 days of such enactment, 
9 complete a review of such sourcing agreement. During 
10 such time period, the Commission shall implement any 
11 directive of the General Assembly, resolve any 
12 disputes between the parties to the sourcing agreement 
13 concerning the terms of such agreement, approve the 
14 form of such agreement, and issue an order finding that 
15 the sourcing agreement is prudent and reasonable.
16  The facility cost report shall be prepared as follows: 
17   (A) The facility cost report shall be prepared by 
18 duly licensed engineering and construction firms 
19 detailing the estimated capital costs payable to one or 
20 more contractors or suppliers for the engineering, 
21 procurement and construction of the components 
22 comprising the initial clean coal facility and the 
23 estimated costs of operation and maintenance of the 
24 facility. The facility cost report shall include:
25    (i) an estimate of the capital cost of the core 
26 plant based on one or more front end engineering 
 
 
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1 and design studies for the gasification island and 
2 related facilities. The core plant shall include 
3 all civil, structural, mechanical, electrical, 
4 control, and safety systems.
5    (ii) an estimate of the capital cost of the 
6 balance of the plant, including any capital costs 
7 associated with sequestration of carbon dioxide 
8 emissions and all interconnects and interfaces 
9 required to operate the facility, such as 
10 transmission of electricity, construction or 
11 backfeed power supply, pipelines to transport 
12 substitute natural gas or carbon dioxide, potable 
13 water supply, natural gas supply, water supply, 
14 water discharge, landfill, access roads, and coal 
15 delivery.
16   The quoted construction costs shall be expressed 
17 in nominal dollars as of the date that the quote is 
18 prepared and shall include capitalized financing costs 
19 during construction,
taxes, insurance, and other 
20 owner's costs, and an assumed escalation in materials 
21 and labor beyond the date as of which the construction 
22 cost quote is expressed.
23   (B) The front end engineering and design study for 
24 the gasification island and the cost study for the 
25 balance of plant shall include sufficient design work 
26 to permit quantification of major categories of 
 
 
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1 materials, commodities and labor hours, and receipt of 
2 quotes from vendors of major equipment required to 
3 construct and operate the clean coal facility.
4   (C) The facility cost report shall also include an 
5 operating and maintenance cost quote that will provide 
6 the estimated cost of delivered fuel, personnel, 
7 maintenance contracts, chemicals, catalysts, 
8 consumables, spares, and other fixed and variable 
9 operations and maintenance costs. The delivered fuel 
10 cost estimate will be provided by a recognized third 
11 party expert or experts in the fuel and transportation 
12 industries. The balance of the operating and 
13 maintenance cost quote, excluding delivered fuel 
14 costs, will be developed based on the inputs provided 
15 by duly licensed engineering and construction firms 
16 performing the construction cost quote, potential 
17 vendors under long-term service agreements and plant 
18 operating agreements, or recognized third party plant 
19 operator or operators.
20   The operating and maintenance cost quote 
21 (including the cost of the front end engineering and 
22 design study) shall be expressed in nominal dollars as 
23 of the date that the quote is prepared and shall 
24 include taxes, insurance, and other owner's costs, and 
25 an assumed escalation in materials and labor beyond the 
26 date as of which the operating and maintenance cost 
 
 
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1 quote is expressed.
2   (D) The facility cost report shall also include an 
3 analysis of the initial clean coal facility's ability 
4 to deliver power and energy into the applicable 
5 regional transmission organization markets and an 
6 analysis of the expected capacity factor for the 
7 initial clean coal facility. 
8   (E) Amounts paid to third parties unrelated to the 
9 owner or owners of the initial clean coal facility to 
10 prepare the core plant construction cost quote, 
11 including the front end engineering and design study, 
12 and the operating and maintenance cost quote will be 
13 reimbursed through Coal Development Bonds.
14  (5) Re-powering and retrofitting coal-fired power 
15 plants previously owned by Illinois utilities to qualify as 
16 clean coal facilities. During the 2009 procurement 
17 planning process and thereafter, the Agency and the 
18 Commission shall consider sourcing agreements covering 
19 electricity generated by power plants that were previously 
20 owned by Illinois utilities and that have been or will be 
21 converted into clean coal facilities, as defined by Section 
22 1-10 of this Act. Pursuant to such procurement planning 
23 process, the owners of such facilities may propose to the 
24 Agency sourcing agreements with utilities and alternative 
25 retail electric suppliers required to comply with 
26 subsection (d) of this Section and item (5) of subsection 
 
 
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1 (d) of Section 16-115 of the Public Utilities Act, covering 
2 electricity generated by such facilities. In the case of 
3 sourcing agreements that are power purchase agreements, 
4 the contract price for electricity sales shall be 
5 established on a cost of service basis. In the case of 
6 sourcing agreements that are contracts for differences, 
7 the contract price from which the reference price is 
8 subtracted shall be established on a cost of service basis. 
9 The Agency and the Commission may approve any such utility 
10 sourcing agreements that do not exceed cost-based 
11 benchmarks developed by the procurement administrator, in 
12 consultation with the Commission staff, Agency staff and 
13 the procurement monitor, subject to Commission review and 
14 approval. The Commission shall have authority to inspect 
15 all books and records associated with these clean coal 
16 facilities during the term of any such contract.
17  (5.5) Other clean coal facilities. In order to promote 
18 the development of clean coal power generation, and in 
19 furtherance of the State's goal of having at least 25% of 
20 the State's electricity generated by cost-effective clean 
21 coal facilities by January 1, 2025 as provided in paragraph 
22 (1) of this subsection (d), the Agency and Commission shall 
23 include sourcing agreements covering power produced by (i) 
24 clean coal facilities, as defined in Section 1-10 of this 
25 Act, and (ii) facilities specified in paragraphs (3) and 
26 (5) of this subsection (d), in each annual power 
 
 
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1 procurement plan.
2  The Agency and Commission shall require utilities and 
3 alternative retail electric suppliers to enter into such 
4 sourcing agreements as part of the annual power procurement 
5 process.
6  The Agency and Commission shall establish a 
7 competitive procedure to solicit and receive proposed 
8 sourcing terms from producers of clean coal power 
9 interested in selection for sourcing agreements. The 
10 competitive procedure shall include a method of selection 
11 for inclusion in those agreements.
12  These sourcing agreements shall be subject to the 
13 limits contained in items (A) through (E) of paragraph (2) 
14 of this subsection (d), the benchmarks as set forth by 
15 paragraph (1) of this subsection (d), and the requirements 
16 for sourcing agreements contained in paragraph (3) of this 
17 subsection (d). As part of the annual procurement planning 
18 process, the owners of clean coal facilities may offer 
19 proposals to the Agency sourcing agreements with utilities 
20 and alternate retail electric suppliers required to comply 
21 with this subsection (d), as well as item (5) of subsection 
22 (d) of Section 16-115 of the Public Utilities Act, covering 
23 electricity generated by such facilities. In the case of 
24 sourcing agreements that are power purchase agreements, 
25 the contract price for electricity sales shall be 
26 established on a cost-of-service basis. In the case of 
 
 
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1 sourcing agreements that are contracts for differences, 
2 the contract price from which the reference price is 
3 subtracted shall be established on a cost-of-service 
4 basis. The sourcing agreements shall be included under and 
5 governed by provisions of the Public Utilities Act. 
6  (6) Costs incurred under this subsection (d) or 
7 pursuant to a contract entered into under this subsection 
8 (d) shall be deemed prudently incurred and reasonable in 
9 amount and the electric utility shall be entitled to full 
10 cost recovery pursuant to the tariffs filed with the 
11 Commission. 
12 (e) The draft procurement plans are subject to public 
13comment, as required by Section 16-111.5 of the Public 
14Utilities Act.
15 (f) The Agency shall submit the final procurement plan to 
16the Commission. The Agency shall revise a procurement plan if 
17the Commission determines that it does not meet the standards 
18set forth in Section 16-111.5 of the Public Utilities Act.
19 (g) The Agency shall assess fees to each affected utility 
20to recover the costs incurred in preparation of the annual 
21procurement plan for the utility.
22 (h) The Agency shall assess fees to each bidder to recover 
23the costs incurred in connection with a competitive procurement 
24process.

25(Source: P.A. 97-325, eff. 8-12-11; 97-616, eff. 10-26-11; 
2697-618, eff. 10-26-11; 97-658, eff. 1-13-12; 97-813, eff. 
 
 
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17-13-12; 98-463, eff. 8-16-13.)


2 Section 99. Effective date. This Act takes effect upon 
3becoming law.